**Exhibit 31.1**

 

CERTIFICATION 

 

I,L. Leon Patterson, certify that:  

 
| 1.     | Ihave reviewed this quarterly report on Form 10-Q of Palmetto Bancshares, Inc.;                                                                                                                                                                                                                                                     |
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| 2.     | Based on my knowledge,this report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading with respectto the period covered by this report;                              |
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| 3.     | Based on my knowledge,the financial statements, and other financial information included in thisreport, fairly present in all material respects the financial condition, resultsof operations and cash flows of the registrant as of, and for, the periodspresented in this report;                                                 |
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| 4.     | The registrant's othercertifying officer(s) and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined inExchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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|   |                                                                                                                                                                                                                                                                                                                                | a. | Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is beingprepared; |
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|   |                                                                                                                                                                                                                                                                                                                                | b. | Designed such internal control over financialreporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accountingprinciples; |
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|   |                                                                                                                                                                                                                                                                                                                                | c. | Evaluated the effectiveness of the registrant'sdisclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and |
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|   |                                                                                                                                                                                                                                                                                                                                | d. | Disclosed in this report any change in theregistrant's internal control over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant's fourth fiscal quarterin the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financialreporting; and |
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| 5.     | The registrant's other certifying officer(s) andI have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant's auditors and the audit committee of theregistrant's board of directors (or persons performing the equivalentfunctions):                                      |
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|   |                                                                                                                                                                                                                                                                                                                                | a. | All significant deficiencies and materialweaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant'sability to record, process, summarize and report financial information; and |
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|   |                                                                                                                                                                                                                                                                                                                                | b. | Any fraud, whether or not material, that involvesmanagement or other employees who have a significant role in the registrant'sinternal control over financial reporting. |

 

/s/     L. Leon Patterson                           

L.Leon Patterson

Chairman and Chief Executive Officer

Palmetto Bancshares, Inc.

 

 

Dated:May 12, 2008